Exam 12: General Equilibrium and the Efficiency of Perfect Competition

You value your favorite shirt at $110. Someone else values it at $150, and that person is willing to pay you $120 for your shirt. Would selling your shirt to this person for $120 be Pareto efficient?

Refer to the information provided in Figure 12.3 below to answer the question(s) that follow. Figure 12.3 -Refer to Figure 12.3. The DVD industry is a constant-cost industry. As the demand for DVD players shifts from D' to D, which of the following will not occur?

Efficiency occurs when

Absent externalities and public goods, a perfectly competitive system is equitable.

One reason to require medical practitioners to be licensed is that

It is essential to establish specific criteria to judge the performance of any economic system. One such criterion is

Under perfect competition,

Marginal cost is a good measure of

Refer to the information provided in Figure 12.4 below to answer the question(s) that follow. Figure 12.4 There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S^{0 and D0.} -Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, sector X will likely see ________ and sector Y will likely see ________.

Because most people prefer smartphones to flip phones, firms can improve efficiency by

Preferences have just shifted away from beef and into mutton. If you are a sheep rancher, the best profit-maximizing strategy is to

Suppose a new government policy will generate $5,000 of benefits for local businesses and $3,000 of costs. This policy can best be described as

Open, competitive output markets ensure that households do not end up with the wrong goods and services.

________ is an example of a public good.

Suppose that a town has two major bottling plants. One of these bottling plants is unionized and the union has just negotiated a 7% wage increase each year for the next two years. Which of the following is most likely to occur?

Suppose a policy change will generate $180,000 of benefits for low-income families and $150,000 of costs for high-income and middle-class families. This change can best be described as

If a donut shop runs a special and sells a dozen donuts for $3.00, Tarik buys a dozen donuts each week. If donuts are not on special and the price is $6.00 per dozen, Tarik buys no donuts each week. Which of the following is true?

Voluntary exchange is a change that makes

An example of a public good is

Relating to the Economics in Practice on page 253: Ethanol is a fuel produced from corn, and ethanol subsidies have increased the supply of corn. As a result, demand for farm land has ________. Further, the supply of other grains has ________.